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Cheque Bounce Rule: Having a check bounce is considered a punishable offence. And if this happens, there is a provision for both fine and 2 years imprisonment. A case is registered against it under section 138.
Cheque Bounce Rule: If you also make payment through cheque, then it is very important to take care of many things. Otherwise, if the Cheque bounces, you may have to go to jail along with the fine. Check bounce is considered a legal offense in the language of the court. In this, a provision has been made for punishment under the Negotiable Instruments Act of 1881.
When does a Cheque bounce?
When a bank rejects a Cheque for some reason and the payment is not made, it is called check bounce. The reason for this happening is mostly due to lack of balance in the account. Apart from this, even if there is a difference in the person’s signature, the bank rejects the cheque.
- Due to Cheque bounce
- Insufficient funds in the payee’s bank account
- Signature mismatch
- Account number mismatch
- Issue with date of Cheque
- Non-uniformity of amount in words and figures
- Mutilated Cheque
- Overdraft limit
What happens after a Cheque bounces?
When the Cheque bounces, the person giving the Cheque has to inform about it. After which he has to pay you within 1 month. In case of not doing so, a legal notice is sent to the person. Even after that, if no reply is given for 15 days, then a case is registered against him under section 138 of Negotiable Instrument Act 1881. Under the Negotiable Instruments Act, 1881, the person can be prosecuted and the check drawer can be punished for up to two years.
How long is the Cheque period?
Cheques, bank drafts are currently valid for 3 months from their issue.
Why are they valid only for 3 months?
It is common banking practice to dishonor a Cheque older than 3 months. This practice is for the safety of the person who has written the cheque, as there is a possibility that the payment may have been made through some other means or the check may have been lost or stolen.
Keep these things in mind before issuing a Cheque
- Whenever you give a Cheque to someone, make sure that you have money in your account.
- Apart from this, the person taking the Cheque should get it cashed within three months.
- Whenever paying someone with a cheque, avoid giving more space between words and figures regarding name and amount.
- Whenever you sign a bank cheque, remember that you have to sign in the same way as it is already recorded in the records of the concerned bank branch.
- Whenever you pay someone through a bank cheque, make sure to note down the details of the Cheque like Cheque number, account name, amount and date.
- Always issue account payee cheques.
- The signature on the Cheque should be registered with the bank.
- Fill in the information on the Cheque carefully and correctly.